Geopolitical Risks: Transboundary Rivers

Highlights-China owns headwaters to at least 10 major rivers, no formal agreements exist with China-Water scarcity & stress is increasing political tension in the region -Full extent of dam impacts not assessed despite escalating program

Asia’s lifeblood

The Qinghai-Tibetan Plateau, extends an impressive 2.5 million km2 constituting what is euphemistically known as the roof of the world. Often referred to as the Third Pole, the Plateau is home to the largest freshwater reserves outside the north and south poles. It is also the source of some of Asia’s main river arteries, which from west to east include the Indus, Ganges, Brahmaputra, Irrawaddy, Salween, Mekong, Yellow and Yangtze.

With the exception of the Yellow and Yangtse, these rivers are transboundary1, in some instances, such as the Mekong, crossing several countries as they descend from the Plateau eventually discharging into the Bay of Bengal, Andaman and South China Seas. In combination, they are a major source of fresh water for the following countries: Pakistan, India, Nepal, Bangladesh, Burma, Laos, Thailand, Cambodia and Vietnam.

Transboundary rivers are a source of political tension globally and this region, replete with water resources, is no exception. To put this in context, about 40 percent of the world’s population relies on shared water resources2 and as regards to China, over a third of the country is an international river basin, with 18 shared rivers.3

Setting the scene: the security landscape

Water scarcity in many countries has raised the thorny issue of water security.5 In Asia, Pakistan has been identified as at extreme water security risk, while China, India, Bangladesh, Thailand and Cambodia are considered as high risk, according to a 2010 index by Maplecroft6. The Index identifies risks across supply chains, operations and investments of multinational companies and is calculated by measuring the four key areas : i)access to improved drinking water and sanitation; ii)the availability of renewable water and the reliance on external supplies; iii) the relationship between available water and supply demands; and iv) the water dependency of each country’s economy.

This should come as no surprise. Put simply, the global population is projected to increase by nearly 50% in just 40 years, a sobering thought as water crises emerge globally, and inequitable access to water causes disease and death of millions every year. There is after all no substitute for water and by 2025 water scarcity is expected to affect more than 1.8 billion people, millions across the Asia region.

Renowned water experts such as Peter Gleick talk of reaching “Peak Water” or more accurately “Peak Ecological Water”,7 a worrying concept that Gleick suggests signals an end to any cheap and easy access to this essential resource.

Considering that ten of Asia’s key rivers are sourced in Chinese Territory, without equitable agreements on managing these strained water resources, conflict is perhaps inevitable.

On the topic of water conflict, a brief internet search quickly yields a world of discussion highlighting the growing concern over potential water wars, pointing to where security risk is deemed highest; China and India appear frequently.

According to the United Nations, an estimated 40 percent of intrastate conflicts over the past 60 years are associated with natural resources, and since 1990 at least 18 violent conflicts have been fuelled by the exploitation of natural resources and other environmental factors.8

According to Peter Gleick’s water chronology9, since 1947 water has been associated with conflict in over 150 instances, more frequently than not involving some form of violence. Water conflicts can take several forms such as water being a military target, a military tool, a political weapon and as the focus in development disputes.

About 45 percent of these conflicts have included some form of developmental dispute and nearly a third have been in Asia, two thirds of which have involved India, China or Pakistan. Most water conflicts to date however appear to be intrastate, relatively few involving more than one country. In China’s case, conflict usually involves citizen on citizen clashes or citizen versus government clashes (see “Pressure Builds on Apple“) . Of the two bilateral conflicts identified involving China, other parties have been Tibet and India respectively.

As the United Nations Environment Program points out, however, some of the world’s greatest potential tensions over water resources, for example over the Indus River system, have been addressed through cooperation rather than violent conflict,10. Thus, integrating environmental management and natural resources into peace building is today considered a security imperative.

In some instances, even before water crises were apparent, efforts have been made to manage transboundary rivers such as the lower reaches of the Mekong. As far back as 1957, Cambodia, Laos, Thailand and the Republic of Vietnam established the joint Committee to supervise planning and investigation of water development projects in the lower Mekong basin. Later in 1995 the Mekong River Commission (MRC) was established with a vision to bring about an economically prosperous, socially just and environmentally sound Mekong River Basin, with regional cooperation and basin-wide planning at the heart of its operation.

The MRC, however, relies on consensus and today strains are showing as Laos plans to build the first dam on the Mekong outside of Chinese Territory (see below).

Troubled waters – dams, diversions and geopolitics

The real crux of the matter as regards China and its management of transboundary waters, is concern over unilateral damming and diversion of upstream rivers that feed into Asia’s main water arteries.

China has long recognized gaps in its water supply and demand, exacerbated by uneven distribution across the country. The ambitious south to north water diversion project has raised alarm bells among those concerned over China’s potential to divert rivers that are transboundary in nature, with the Brahmaputra being of particular concern. As Isabel Hilton of China Dialogue points out in – “Diverting the Brahmaputra: Much Ado About Nothing?“ such a diversion would, however, be staggeringly expensive and complex to the point of being almost incalculable.

Hilton further clarifies that only 14 percent of the Brahmaputra’s flow is in the river at the point at which it enters a huge high altitude gorge in the Himalaya, dropping 3,000m before re-emerging in Assam. The other 86 percent enters the river after it has entered India, thus the impact of a diversion, even if technically feasible would be unlikely to have the catastrophic impacts imagined.

Perhaps, what is more relevant in the geopolitical context, is China’s intention to dam rivers that flow for hundreds of kilometres through its lands before entering neighboring countries downstream, notably the Mekong and Salween, as well as the Brahmaputra .

In line with its 12th Five Year Plan and a move to widen the contribution of non-fossil fuels to the nation’s vast power generating capacity, dam building appears firmly on China’s development agenda. Some analysts believe that the country will have installed about 348GW hydropower capacity by 2020 a rise of 37per cent from 201111.

Take the Mekong as an example. As Asia‘s longest river, the Mekong starts life in the Tibetan Plateau as the Dza-chu, from here it flows 500km through the Three Rivers Basin, running aside the Yangste and Salween. It descends across Yunnan Province in China where it’s known as the Lancang, before continuing its descent, forming borders between Burma, Laos and Thailand. Finally, the river enters the South China Sea after flowing across Cambodia and Vietnam respectively.

China is already building eight dams along the Lancang section of the Mekong with little consultation with its downstream neighbors. Several are operational, reportedly influencing downstream hydrology and leading to a range of impacts such as sedimentation, erosion of riverbanks and changing nutrient profiles. Local fishermen in Thailand hold the dams responsible for the depletion of what was once a plentiful fish supply. The Mekong’s flow is also reported to be unpredictable since China started damming the Lancang12 and is blamed for both uncharacteristic droughts and floods downstream.

While China’s thirst for water is worrying its neighbours , it seems that it’s is not alone in dam building, with downstream countries also engaged in controversial projects . Twelve dams, estimated at over 14.5 MW installed capacity are currently in the offing with regard to the lower Mekong, amongst claims that altered flood hydrology immediately downstream of the Lancang dams makes the economics of dam building more favourable than previously13.

The first, the controversial Xayaburi dam being proposed by Laos, is in limbo, with further studies needed given scientific consensus that not enough is understood about the potential impacts of this and other dams proposed. Laos has already built several dams on tributaries of the Mekong.

The Lao government is treading murky waters; it seems Vietnam and Cambodia are against the Xayaburi Dam, while not only are Thai banks set to provide the capital with a Thai company leading construction, but most of the power generated would be for Thai consumers. All four countries are part of the Mekong Rivers Commission.

Anxiety is also rising over fears that should it go ahead, the Xayaburi Dam will literally open the floodgates to the series of dams proposed along the Mekong including several more in Laos as well as Thailand and Cambodia, with untold impacts on downstream users. Food security is bound to be an issue, particularly in Cambodia, where the Mekong ‘s wet season flows, back up into the Tonle Sap, increasing fish14 productivity and providing a major source of protein for millions of people .

As if transboundary water management and geopolitical implications were not complicated enough, the Economist reported earlier this year of US concerns, that if the Xayaburi dam goes ahead, this would make way for Chinese companies to strengthen their lead in constructing additional dams, thereby providing China a greater foot hold in the region.15

While the Mekong serves to illustrate the rising tensions and geopolitical machinations, similar tales are unfolding as a result of potential dam developments in relation to the Salween, the Irrawaddy and the Bramaputra.

The Salween (the Nu River in China, and the Thanlwin River in Burma) has the added complication of flowing through an environmentally rich United Nations World Heritage site. Currently, it faces 13 dams planned in Chinese territory with a total generating capacity of 21.3GW, similar to that of the Three Gorges16 Dam, and a further cascade of dams planned along the river in Burma and Thailand.

Some of these dams are located in highly sensitive areas environmentally and according to WWF,17 China’s Yunnan Provincial Government appears to proposing one of the highest dams in the world without consulting either Burma or Thailand.

Turning to the Irrawaddy, political maneuvering is evident with China lobbying the Burmese Government to build the Myitsome Mega Dam Project18, despite President Theon Sein’s suspension of the damin September last year; a surprising move apparently in response to significant protests over environmental and also safety issues as a result of the dam being located in an area of seismic activity. The dam, it is estimated, would have an installed capacity of up to 6,000MW, supply 90% of its electricity to China and would be the 15th largest hydropower station worldwide.19z

This upsurge in Chinese pressure coincidentally comes at a time when the US and Europe are making diplomatic gestures to Burma’s military Junta.

Adding to tension over shared water resources is lack of transparency. Information needed to assess the potential impacts of dams, such as hydrological data, is seemingly less than forthcoming in many cases. Such claims have been made against both China and India.

Given the scramble for dams along these transboundary rivers, the protocols of operating dams upstream and how this affects downstream operators remains an interesting question and one that China Water Risk will explore further in coming months . The purpose of the dams is inevitably important, those designed for power generation will wish to maintain water flow, whereas should flood control be an objective, then a different protocol would be employed. Without cooperation, communication and agreement, the potential for conflict between upstream and downstream dam operators seems likely.

Out of sight out of mind – transboundary aquifers

The question of shared aquifers, while not widely discussed in the geopolitical context, is also a potential cause for concern given increasing depletion and or pollution of these resources. Peter Gleick points to some facts we shouldn’t forget20. That, 99 percent of the Earth’s accessible freshwater can be found in aquifers and 2 billion people rely on them for their sole source of water. There are in fact more shared aquifers than river basins, yet aquifers are typically excluded from transboundary water agreements and are rarely discussed in relation to water conflicts. Over a quarter of the world’s transboundary aquifers are in Asia.

Geopolitical risk is here to stay

Rising tensions and political maneuvering in Asian countries whose main water arteries stem from the Tibetan plateau are a result of a unique combination of factors: a densely populated area with increasing water scarcity exacerbated by climate change and pollution; significant dependence on water intensive agriculture and; an unrivaled appetite for rapid economic growth and development led by China. As a result of these factors, the water and closely related food security landscape is changing.

The region’s rivers are essential to economic development and to sustaining millions Asia-wide through the provision of food, water and livelihoods. Yet the transboundary nature of many of these water resources and China’s ownership of the upper reaches of key rivers provides an ideal environment for political jockeying and conflict. In particular, China has the political clout and access to capital if it should choose to manage water reserves in a manner that may not be in the interests of neighboring countries.

Tensions are increasingly evident between China and its neighbors over lack of transparency and consultation in relation to its dam-building activities in its own territory. Strains are appearing among downstream neighbors as countries plan dams and align themselves with selected parties, and tensions are rising as China pursues its dam interests beyond its own borders.

Looking forward, the geopolitics associated with transboundary waters in this region are only likely to intensify as the impacts of glacial retreat and the cumulative effects of escalating dam development over finite water resources become clear. Geopolitical risks are therefore here to stay and are a worthy consideration for investors and businesses operating in the region.

The issue of risk associated with shared water resources and particularly dams is as broad as it is complex. This article serves only to provide an introduction to geopolitical risk and does not detail the myriad social and environmental risks associated with the enormous programme of dam development in the region. Such issues will be addressed by China Water Risk in future.

1A transboundary waterway has been defined as ‘all territory that contributes to a stream, at least one of the tributaries of which crosses a boundary. Accordingly 60 percent of the world’s freshwater, falls within such basins.

2 The World’s Water, Volume 7, 2012

3The World’s Water, Volume 7, 2012

4The Worlds Water, Volume 7, 2012

5Water security, defined as a country’s ability to secure enough clean water to meet needs for household uses, irrigation, hydropower and other ends

18China Press Myanamar on Installed Dam, Asia Times on line , 2012

19The Word’s Water, Volume 7, 2012

20The Word’s Water, Volume 7, 2012

About Sophie le Clue

Sophie is a Director of ADMCF and is responsible for the Foundation’s environmental investments, including the identification/evaluation of projects and aligning financial investment with strategic philanthropic objectives. Sophie has worked for the past 20 years in the field of environmental protection and conservation, principally in the Asia Pacific region. She started her career in the UK working in London for an international engineering consulting firm as an environmental consultant, before moving to Hong Kong in 1992. Since then, Sophie has directed and managed consultant teams working on a range of projects for both public and private sector organizations, including environmental impact assessments, environmental management, policy and strategy development, as well as undertaking research projects in the Asia Pacific region.